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Navigating the personalization minefield: How businesses can improve customer experiences and loyalty

Bynewsmagzines

Jun 15, 2023


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This article is part of a VB special issue. Read the full series here: Building the foundation for customer data quality.

From Netflix to Amazon, almost every company today is racing to grow its business through personalization. They are using data; they are pushing out ads, recommendations and messages; and they are expecting customers to interact with those communications for increased sales and long-term relationships. 

The idea is to treat each prospect as a unique individual, bringing a much-needed human touch to the way businesses are run. Even end users are on board with this approach, with as many as 66% saying in a Twilio survey that they are likely to stop using a brand and switch to alternatives if their experience is not tailor-made. 

But here’s the thing: Even as brands and consumers are all in favor of personalization in concept, the execution still appears to be going wrong. In the same Twilio poll, which involved nearly 5,000 B2C leaders and 6,000 customers, 91% of brands said they often or always personalize engagement with consumers, but just 56% of consumers agreed that this was the case, highlighting a major gap that needs to be addressed.

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“Consumers today are bombarded with marketing messages across several channels from brands. And more often than not, what they’re receiving is irrelevant and only serves to frustrate,” Robin Grochol, VP of product management at Twilio, told VentureBeat.

Simply put, either companies are not delivering the right content or they are delivering the right content at the wrong time — leading to poor customer experience, missed opportunities and a waste of valuable marketing dollars. 

Building the right data foundation

While most businesses realize gathering data is the key to successful personalization, what many miss out on is understanding the type of data they need to capture to build a strong customer profile, and the right approach to activate that profile.

Even if cookies are going away, about 80% of companies continue to rely on third-party data to drive personalization. This is a major roadblock as most of this information comes from outside sources and is not that accurate for building customer profiles, even when one employs AI and ML models to correlate and fill in the blanks.

As an alternative, Grochol suggests companies should focus on acquiring zero- and first-party data, which comes directly from customers, is more accurate and better reflects current demand. Zero-party data is information proactively shared by customers, while first-party data stems directly from their interactions. This data provides an easy way to gain insights into user behavior (like how they work, travel, dine and spend) and related context. 

“That’s why companies track user ‘events,’ i.e. every significant action a user takes within the digital product, like retaining, churning or transacting,” Amir Movafaghi, CEO of product analytics platform Mixpanel, told VentureBeat. “User event data can be segmented to help understand what different groups of users have in common or how they’re different. This allows companies to build user cohorts and understand what those groups value during each stage of the customer experience. This understanding is crucial to building a personalization strategy that delivers long-term value to customers.”

Once a team knows what it wants to track, the next step is to break down silos and bring every relevant piece of information (covering data from all touchpoints and interactions) into a single customer data platform — while also maintaining the quality and accuracy of that data through master data management (MDM) or the use of data clean rooms. 

This is critical, as most companies today maintain dozens of internal systems, keeping data scattered across not only various databases and formats (separated by product line, geography, etc.) but also different departments. Such fragmentation makes it difficult to build a unified 360-degree view of the customer. The gaps can also mean the data might have missing fields or is outdated.

“If data is siloed or gets stuck in one system of record, a brand effectively misses a piece of its customer puzzle. Businesses need to have the tools to not only merge customer data from different sources into a single, unified customer profile but to then easily move that profile to whichever downstream tools they’re using to engage customers,” Twilio’s Grochol noted.

Activating customer profiles 

Once relevant customer profiles are ready, they have to be activated in real time via the customer data platform (CDP) to serve personalized messaging just when customers need it. To do this, the platform groups customers with similar characteristics or behaviors and targets those segments with tailor-made marketing campaigns, offers and experiences, delivered via integrated marketing and advertising tools.

For instance, if a customer goes through the process of buying an SaaS product subscription but pulls back at the last minute, the data from that interaction would go into their CDP profile in real time and the system could email them a personalized discount code. This not only increases the chance of new signups but also helps build loyalty and customer lifetime value (LTV).

“Ideally, these crucial aspects (customer profiling and activation) should be utilized on one unified platform, enabling businesses to act on their data across multiple channels, while also measuring results,” Anil Matthews, CEO of data intelligence platform Near, told VentureBeat.

“Without a unified approach, using multiple vendors can lead to data silos and confusion about governance, creating difficulties for the organization — before even attempting to reach customers. Having a solid foundation and a clear data strategy with the right elements in place will result in a clear and accurate view of your customers, further resulting in hyper-personalization and business success,” Matthews said.

Crawl, walk, then run

While deploying the right data and technology can help companies deliver individualized experiences and accelerate revenue growth, it’s important to note that personalization may not be needed everywhere.

To make sure leaders do not lose sight of what’s needed amid the growing pursuit of personalization, Arun Kumar, EVP, data and insights at digital experience company Hero Digital, recommends a crawl, walk and run approach. 

He says businesses should first be crystal-clear on why they want to deliver personalized experiences and understand where these will create value in the customer journey.

Only when it’s clear what customers want, and that this can be addressed with personalization, can the business align expectations and articulate its value proposition to specific customer segments — moving on to the next (“walk”) stage.

Finally, when the personalization efforts are up and running, teams should keep an eye on the ground to see what’s working and optimize accordingly, Kumar says.

“When you personalize, you get a lot of customer signals back. If you’re personalizing well, it will show up in your data. People will sign up more. They will buy more. This means you need to listen to customer behavior and be very proactive with data analytics to understand how people are responding,” he said.

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